Prosecutors Begin Estimating Damage Scale of 'Luna Crash'... Considering Forced Investigation

Legal Review on the Applicability of Fraud Charges under Criminal Law

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Byung-don] The prosecution investigating the crash of Korean cryptocurrencies Luna (LUNC) and TerraUSD (UST) has reportedly begun estimating the exact scale of the damage.

On the 12th, according to the prosecution, the Joint Investigation Team on Financial and Securities Crimes at the Seoul Southern District Prosecutors' Office is reviewing the legal grounds to determine whether losses incurred by purchasing Luna coins on exchanges and suffering from the crash can also be considered fraud damage.

Under criminal law, fraud is established when "a person deceives another to receive delivery of property or obtain financial benefits." However, when Luna coins are purchased on a cryptocurrency exchange, the money paid for Luna goes not to Terraform Labs or CEO Kwon Do-hyung, but to the sellers who listed the coins on the exchange.

Even if Terraform Labs' failure to properly disclose defects of the algorithmic stablecoin is regarded as a deceptive act, it is not easy to conclude and connect that CEO Kwon and others "obtained financial benefits."

The prosecution is reportedly first distinguishing those who purchased the coins at the initial issuance, which were not circulated on the market, as the ones who suffered "fraud damage," and is proceeding with identifying them.

However, since it is currently impossible to ascertain this with the materials secured so far, the prosecution is pushing for Terraform Labs to submit data containing the initial issuance and transaction records of the coins. If the company refuses to comply with the data submission request, forced investigation is also being considered.

However, since Terraform Labs' Korean branch corporation has been dissolved and the office withdrawn, making the target of a search and seizure effectively unclear, CEO Kwon, who is staying overseas, may be directly investigated. Measures to secure his custody include passport invalidation or extradition.

This content was produced with the assistance of AI translation services.